India-UK Trade Pact Nears May Start

The India-UK free trade agreement signed last July is likely to take effect from the second week of May, an official said, setting up a major shift in trade rules between the two countries and opening the door to lower tariffs on British goods in India, including Scotch whisky and automobiles.

India and Britain signed the Comprehensive Economic and Trade Agreement on July 24, 2025, after years of negotiations aimed at widening market access and reducing duties on both sides. Under the pact, 99% of Indian exports will enter the British market duty-free, while India will gradually cut tariffs on a range of British products.

“We are expecting the pact to be implemented from the second week of May,” the official said.

The two countries have also signed a separate Double Contributions Convention, which is meant to prevent temporary workers from having to pay social security contributions in both countries. The official said both agreements are expected to come into force at the same time.

The trade pact is designed to lift bilateral trade, which stood at $56 billion, with both governments aiming to double that figure by 2030. For India, the agreement is expected to improve access for exports such as textiles, footwear, gems and jewelry, sports goods and toys. Britain will gain better access for products including chocolates, biscuits and cosmetics.

One of the most closely watched changes is in spirits. India will cut the tariff on Scotch whisky from 150% to 75% immediately once the agreement takes effect, then lower it further to 40% by 2035. That change is likely to affect pricing, margins and sourcing decisions for importers, distributors and retailers in India’s alcohol market.

The agreement also covers automobiles. India will reduce import duties on cars to 10% over five years from current rates that can reach 110%, under a quota system that phases in market access. In return, Indian manufacturers will get access to the British market for electric and hybrid vehicles within a quota framework.

For food and beverage companies, the timing matters because tariff changes can quickly alter import costs and retail pricing. Scotch whisky makers have long viewed India as one of the world’s most important growth markets, but high duties have kept prices elevated and limited volume growth. A lower tariff could make imported whisky more competitive against domestic brands and other spirits already sold in India.

The agreement comes as both governments look for ways to deepen economic ties at a time of global trade uncertainty. The official said implementation work is now moving toward the expected May start date.